Nexus Global Payments – Andrew McCormack  [Season 2 | Episode #27]

Jens Seidl 00:00:32 Welcome to another episode of The P.I.T. Exchange. Payments, Innovation and technology. This is an episode that’s recorded in the field, so to speak. We’re here in Frankfurt, in my hometown at the Sibos conference, and we’ve got a great guest with us today who I think has been in great demand here at Sibos as well, Andrew McCormack from the Nexus Payments Company, to get that right. It’s Nexus.

Andrew McCormack 00:00:58 Global Payments. Indeed. Oh, almost. Right.

Jens Seidl 00:01:03 Welcome, Andrew.

Andrew McCormack 00:01:04 Cheers. Thank you so much. Yeah, it’s great to be here.

Jens Seidl 00:01:07 And thanks for taking the time. And also I was is always super busy.

Jens Seidl 00:01:09 So I really appreciate you taking this time out to have a little chat with us and talk about what’s going on. But before we do that, as usual, I’d like to ask some semi personal questions just to get to know the person and do a little bit better. And since we’re in Frankfurt, I’ll start with apple wine, the notorious local drink. Have you tried it? And if you have, what did you think?

Andrew McCormack 00:01:33 I am embarrassed to say I have not. I should, and maybe I will try to get that done this evening. I had a few too many beverages on Monday night, so I had to sort of take it easy last night. but apple wine would be the top of my list for the next. I do not, at this point have a have a strong opinion about it.

Jens Seidl 00:01:52 It’s a little bit like Marmite, so either you hate it or love it. It’s what most people say anyway. Well, enjoy when you get a chance to think so. And then you’ve been when you’re going to talk about that in a little while in more detail.

Jens Seidl 00:02:04 But you’ve lived in different places like Canada and the UAE. Now you move to Singapore. What feels like home for you?

Andrew McCormack 00:02:10 Great question. You know, I think Canada will always feel like home for us. I mean, we we loved living abroad. I think my, my kids are hopefully a little smarter and have a bigger field of vision than they would have otherwise. But, you know, when we head home in the summers to see family and the familiar places that we grew up, that’s that’s always going to be home base for us, for sure.

Jens Seidl 00:02:33 Yeah. And where abouts in Canada?

Andrew McCormack 00:02:35 We grew up in the Ottawa area. So yeah, right in the right. In the middle. It’s the capital city. and you know, we’re lucky to have family cottages and summer cottages in the West Quebec area. There’s lots of beautiful lakes and rivers and. Yeah, it’s it’s a wonderful place to be, especially in the summer.

Jens Seidl 00:02:51 Yes. Very nice. In the winter. Gets quite cold.

Andrew McCormack 00:02:53 I’m a bit acquired. Taste like, apple wine.

Jens Seidl 00:02:56 Really great. And finally, do you have a favorite band or musical artist or composer or something like that?

Andrew McCormack 00:03:04 Well, that’s a good question. I don’t know if, you know, I’m a former musician. I didn’t plan to plan A was indeed to be a professional musician, which is a terrible plan, or at least a difficult plan. So I’m a big, big music fan. It’s very, very difficult to to choose one artist, but these days, actually one of the a band that I’ve been listening to a lot is called Lord Huron or from, I believe the from the maybe from, from California somewhere. But it’s an American band and absolutely fantastic, singer songwriter. you know, kind of, you know, it’s grown up music, it’s not overly aggressive or it’s rock music, but it’s it’s amazing, amazing songwriting. So. Yeah. Yeah. Fantastic. I’ll, I’ll.

Jens Seidl 00:03:49 I’ll take it. And hopefully our listeners will do as well for sure.

Jens Seidl 00:03:51 And actually, I didn’t introduce myself. I’m Jens Seidl, I’m your host for today. So let’s maybe start with the professional side. Now, do you want to just introduce yourself a little bit? Say what you’re doing now and how you got there.

Andrew McCormack 00:04:04 Yeah.

Jens Seidl 00:04:04 So,

Andrew McCormack 00:04:05 I mean, my, my background is, is actually I was a did computer science, and I worked as a software engineer for about a decade out of school and, eventually found my way into payments because I actually had a small business. And I was very frustrated by the payment methods and options available to me as a small business owner. My working capital. I always like to say, was tied up in in checks in the mail, right? My customers were paying me. It was an engineering company. So we’re gonna larger ticket projects, and we weren’t going to accept credit cards because it was just too expensive to do so. And, and so it became very interested. And it was about 2008. I was like, why is it so hard to get paid and to pay? And, it was just genuine curiosity and a dose of frustration.

Andrew McCormack 00:04:52 And so somehow I found my way into, into, into payments and ended up becoming the chief information officer at Payments Canada, which is the entity that operates the the high value payment system, the clearing system, and soon, hopefully the real time payment system in Canada. I left there in 2020 for an opportunity with the Bank for International Settlements to open their innovation hub in Singapore, and that was a wonderful experience. My first chance to move and move abroad, built that team and over the course of three years did a number of projects, but one of them was Project Nexus, which is what I’ll get to shortly. They, Then an opportunity came my way to build the national domestic retail payment operator in the UAE. it’s now called Etihad Payments. And, working with a former colleague of mine from Payments Canada, John Paul Bower. we we built that company and launched instant payments in the UAE. that service is called Annie and I, that was 2023, 2024. and, and also worked on a very large project there.

Andrew McCormack 00:06:02 And a first for me was in the in the card space, which was the launch of the domestic card scheme. that’s still, kind of happening now, but it’s a, you know, a multi year initiative to, to launch a domestic card scheme, to say the least. so, so that that was the past two years. And now I’m very fortunate to be back in Singapore. I’ve been appointed as the CEO of Nexus Global Payments. And and our mission is to take this project that was born in the innovation hub at the BIS into from theory to practice is what I like to say. So we’re we’re we’re on a we have a mandate to build the platform. Build the company. our, our owners are the five, central banks, Malaysia, Singapore, Thailand, Philippines and, India, of course. So so we’ve got a fantastic group of owners, you know, very committed to the public policy objectives of lowering cost, increasing transparency and speed, and access to cross-border payments. It’s an infrastructure company, and I’m sure we’ll talk more about this for sure.

Jens Seidl 00:07:06 And I mean, at our conferences, we heard a lot about access already, and there’s been quite a buzz about it as well, both in Asia but also in Africa. And I think people are really watching this closely to see how will this help with cross-border payments. But before we talk about more of the detail of how that might happen, may you you want to give us a quick rundown of what happens so far. So just a short overview of the history of how we got to forming this new company.

Andrew McCormack 00:07:35 Yeah. So I says, as I said, the project itself was born from the innovation lab. And, you know, the spirit there was really kind of asking what if or the art of the possible. There had been a bilateral connection established between Fast in Singapore, the incident payment system in Singapore and the instant payment system in Thailand are called prompt pay. And and so they had successfully connected pay now and prompt pay. And that allowed any, you know, any user of any bank in either of those countries to just open their regular bank app, choose, you know, input the, the phone number in this case of the beneficiary in the other country and this execute the payment.

Andrew McCormack 00:08:16 So it really made that cross-border payment feel a lot like the way the domestic payment systems work in those respective countries. And the users don’t have to do anything. They don’t have to download an app. They don’t have to open a wallet. They just use their preferred app that’s already on their phone. Right. And so that’s the elegance of the idea. Obviously, when we saw that, we were impressed by that, I was working on instant payments in Canada prior to joining the rolls. So I had a genuine passion and interest in instant payments. And, and so I thought that was a wonderful pilot project. But obviously payments are a network Business. Right. So the power of any payment system is a function of the reach and the breadth of the network. Right. It’s more useful the more people you can pay or be paid from. And and having a point to point connection is an interesting experiment, but it doesn’t scale. So we thought, why don’t we explore how to take that original idea and just truly think about what a multilateral network of networks could look like, given that there’s now over 70 countries with instant payment systems.

Andrew McCormack 00:09:24 You can see that the timing is is pretty good for for the critical masses there. Obviously the devil is in the details, but let’s let’s kind of explore that from a theoretical perspective. And so the innovation hub, we did a series of phases in that project. I was there for the first two phases and led that work. We basically published it as an open source kind of project in the sense that we developed very detailed to standards. Our mission was to sort of not reinvent the wheel. So we looked at ISO 2002 two messaging that all the work that had been done on CBR plus and IP plus and just say, look, let’s to the extent possible, let’s just lift and shift all of that great work, stand on the shoulders of everyone who’s put that effort in. But but use the use that suite to orchestrate messages in a way that maybe hadn’t quite been done before, but but would logically make sense. And so all of that was published online. And I think the transparency and the quality of the work is what helped, in part, garner some of that interest, which continues to this day.

Andrew McCormack 00:10:26 So long story short, I left for the UAE to to take that journey. But then in the meantime, the team kept, you know, forging ahead and was able to publish another few rounds of work, more focusing on, you know, the rule book side of things, the governance that would be required for such an organization to succeed, really setting the groundwork for where we are now. And then, of course, the big the big piece was convincing the five central banks to actually invest. Right. Which is which is that’s really where the rubber hits the road in terms of you can talk all day long about great ideas inside the lab, but if someone’s not willing to put their money where their mouth is, then you know that that idea is going to going to probably just stay on the shelf. Of course. Yeah.

Jens Seidl 00:11:12 Yeah. Okay, so now you’ve got the company set up. What what are you, short term goals? What is it you want to achieve? And by when?

Andrew McCormack 00:11:19 Probably.

Andrew McCormack 00:11:20 I’m a little ahead of my skis to say the companies set up, but I’m certainly, I’m. I’m on. I’m on board. We’re we’re we’re eight people, which is great. we certainly need to continue to scale through through through 2026. The main priorities are to select our technical partner. We are a scheme, but we are also going to operate a service. And so the technical build needs to be done. we’re really largely, you know, giving ourselves 2026 to do that. So it’s still an a very ambitious timeline, but the scope is clear and we’re standing on four years of work, so we know exactly what the requirements are. We know exactly what we’re building and our partner that we will select very soon and hopefully announce within a few months time, you know, is really well briefed on what the task is to build this platform. So 2026 is very much the build year for that inside the the, you know, as all payment systems and arrangements, you know, there’s the technical side and then there’s the soft infrastructure side is which is the the scheme roles.

Andrew McCormack 00:12:24 Those are paramount. They’re super important. Some would say more important than the the actual technical and stuff. So the rulebook is the second big deliverable for us. We again have a working draft that has been under development for a few years, but we are now kind of really doubling down on expanding the detail, the granularity of that, working out some of the thornier your issues, complexities around liability and, you know, other kind of the legal concepts that need to be enshrined in that document. And the milestone there is of end of Q1 2026. So we’ve got about six months to really wrap a bow around sort of version one of the rulebook. We want to have that published well in advance so that the participants that we would like to onboard, you know, for the first transactions in sort of first half of 2027, a soft launch obviously needs some time to digest the rulebook. And then the last piece is is the commercial model, obviously. So we do have those. Obviously we’re trying to build an arrangement that’s sustainable over time.

Andrew McCormack 00:13:28 We we certainly have funding to, to get us through a certain number of years to, you know, to make this happen. But we have to have a commercial construct that makes sense not just for ourselves, but more importantly, the incentives for the participants, right to say, okay, what’s what’s in it for them, whether you’re an instant payment system operator, whether you’re an end participant, a bank PSP. We also have FX providers, settlement account providers, sort of in the construct. So, you know, obviously that it’s it’s really important that we get those incentives. Right. So that’s the other big deliverable, on the back of, you know, the rulebook.

Jens Seidl 00:14:04 Yeah. Okay. I understand and I guess initially you’re going to focus on those countries that you mentioned before that that have helped setting this up. Now, before you think about further geographical expansion.

Andrew McCormack 00:14:16 Right. I think, absolutely. Like we I think at this point, it’s incumbent on us to prove to the world that this isn’t just a fancy idea, that it actually can and will work.

Andrew McCormack 00:14:27 And we have to do that with the first five. We call them the first mover countries. Right? So, so absolutely that they are the, the, the guinea pigs and the ones that help us prove this construct that can work at scale. And when I say scale, it’s it’s truly astonishing that even just those first five countries. You know, we’re we’re grateful to have India in the fold. But like we’ve got over 15% of the world’s population addressable just with our our starting target markets. So so certainly there’s more than enough to work with just to, to prove the concept. And we have great, great partners. All of those countries have very advanced modern instant payment infrastructure and systems and generally speaking, very deep adoption of those services in those countries as well. So I couldn’t ask for a better place to start. That said, you know, the the name of the company was was, you know, Nexus Global Payments and that was named before I came along. So the message is clear to me that I need to make this more than just the five.

Andrew McCormack 00:15:31 And so my job is definitely to start those early conversations with, interested parties. And, and I’m happy to say there are certainly, quite a, there’s quite a queue of, of, countries and central banks and instant payment system operators that are knocking on the door that we’re talking to in terms of, okay, how do we move them through an evaluation process whereby both they’re looking at us and we are also assessing the readiness of their systems as well, such that if we can make that match, we can get them to the next level. They may come on as owners. In some cases, they may come on as as action more participants. So they’re not necessarily burdened with the ownership model, which may or may not make sense for for any given country. But the point is, we do we do want to expand horizontally across as many countries as possible. But realistically we have to get we got to get this live by 2027. And then the expansion plans would meaningfully kick in after that. Okay.

Andrew McCormack 00:16:29 Yeah.

Jens Seidl 00:16:30 Okay. And but maybe let’s stay on geographical expansion for a minute because listening to this and hearing next is Global Payments. Do you think that the the outcome in who knows in how many years. But it’s got to be that most countries in the world are going to be a Nexus member. Or do you think there’s maybe going to be more like regional islands that will then also interconnect with Nexus? Because you see in some regions there’s already similar initiatives and of course Nexus, but similar initiatives where countries are being interlinked with faster payment rails. What do you think might be the long term vision there?

Andrew McCormack 00:17:08 Yeah, it’s a it’s a fair question. That one that comes up. Certainly. You know, we are working with some of the more regional providers. So and we’ve already published for example, and worked with ECB and the Tips team for, for many years now actually. So while they’re not a partner today, that that is something that we would certainly openly consider and welcome. It certainly makes sense for us.

Andrew McCormack 00:17:30 And it accelerates the scaling of if as long as we can really iron out the details, the devil is always in the details. But you know, where you have a regional service that can broadly bring such a huge swath of, you know, of many, many countries and tips is, of course, expanding itself into multi-currency and different arrangements with some of the Scandinavian countries and perhaps others. So we we welcome those conversations, those opportunities, as long as we can, normalize the the flow and synchronize and harmonize the scheme so that the, you know, again, those two pieces that really come back to the end user experience it this service will be successful only if it provides a valuable, you know, simple, usable experience that customers can rely on and that the incentives are also there for the participating banks to, to, to, you know, genuinely offer this to their customers. And so as long as we can kind of get through all of that, we’re happy to work with regional providers and kind of, frankly, simplify our lives and bring a lot of value, hopefully to those networks as well.

Andrew McCormack 00:18:35 We can bring Asia to tips if that works, right. So I think that’s should be a compelling, value proposition as long as we can harmonize all the the underlying pieces. so yeah, that’s fine. And I don’t expect that it’s going to be necessarily one ring to rule them all in the future. but you know, our mission, we’re not for profit entity. We have a public policy objective. We have to be a sustainable business operation. But our mission is to and we think that, you know, there is tremendous scope and, and space to improve cross-border payments, to do it in this way. And we would be collaborative and open where we where we can with, with other with other regions. And if it makes sense to us directly go into a region, then we’ll also do that as well. Right? We’re not we’re sort of, I guess, trying to keep as many lanes open as possible.

Jens Seidl 00:19:28 Yeah. No, completely understand that. And it’s always difficult to predict the future.

Jens Seidl 00:19:32 Anyway, I think you as you start this journey, I’m sure many other options will present themselves.

Andrew McCormack 00:19:40 Yeah. I mean, I think it’s fair to say that, you know, No coming out of Boston Street. You know, the payments is, you know, every year in the past few years, payments has it’s never been a more exciting time to be in payments. And I think every year we’re almost outdoing ourselves at this point. So there’s certainly no ability for me to predict the future. But there’s a tremendous sort of the window seems to be opening in terms of, okay, what’s possible, all sorts of new things coming down the pike, stablecoins and different things. Instant payments is still evolving and scaling around the world. So who knows how all of this is going to end for sure.

Jens Seidl 00:20:16 And maybe just to to come back briefly on your more short term goals. And the 27 goal that you mentioned, you’ve already broken down for us quite a bit. What needs to happen to to get there? But from your perspective, are they like 2 or 3 main key things and and also key stakeholders that you need to get on board for this to land as you want it to land?

Andrew McCormack 00:20:39 Yeah.

Andrew McCormack 00:20:40 I mean, we’ve been very fortunate to have, you know, come out of the Business Innovation Hub framework. By extension, I think that’s given us a lot of opportunity to work with the central banking community to show them a way to they spend a lot of time thinking about the G20 objectives, right? Cost, transparency, speed, etc. but I think this project is really meant to be very tangible. Okay. We can talk about that. This is how we will do that, right? This is how we will accomplish those things. And I think that’s resonated to a certain level within the central banking community. So I feel very well supported generally from that level of this system. I think where I need to focus now is rather on the commercial sector side, right. I need to spend the majority of my time that I have available from a stakeholder perspective, working with industry participants to make sure that we’ve got the FX providers, you know, in the mix to make sure we’ve got a settlement account providers who can provide that critical entry point into the domestic scheme, a domestic instant payment system, to have the accounts with the effects providers and make sure liquidity is available.

Andrew McCormack 00:21:51 And of course, the end user participants making sure that the banks in these countries are embracing this service, that are willing to offer it to their customers in their channels and apps. And all of that is is really facing, I would say, the, the, the industry side as opposed to the the regulator side of obviously, the regulators are still going to be interested in some of the finer details than what we can do on sanctions screening or, you know, anything in the in the center. But yeah, practically speaking, that’s my focus right now. Is is rather lots of love from my central bank stakeholders. But thank you very much. I need to spend time with the industry for the next year or two.

Jens Seidl 00:22:30 Sure. Yeah, I understand, and is it fair to say that part of the beauty of what you’re doing here is that you will not really have to worry about the merchant and consumer side, because that’s what the local payment schemes are already taking care of anyway.

Andrew McCormack 00:22:43 Correct. I mean, that’s the whole idea is, you know, it’s I’ve been involved in the in Canada and the UAE on, you know, the initiatives to create those instant payment platforms and infrastructures and schemes.

Andrew McCormack 00:22:57 And I have a, you know, a very kind of first hand appreciation for just how much investment time and energy goes into building those networks and making those services come to light, and driving adoption and connecting all the participants. And it’s usually measured in 5 to 10 years. It’s, you know, educating the consumer and and managing all of that and building even in many cases, a brand. Right. In, in in Singapore, it’s called pay. Now you don’t know that as a German it doesn’t matter to you what they call the local domestic instant payment experience. You know, in Malaysia it’s called do it now and it’s dominant in Malaysia. But again, you’ve never heard of that and you don’t need to know about that. But those markets do. And so we want to basically say to each and every one of those markets, you already have solved this problem. Your customers know the brand and the experience. We’re not providing a new brand. We’re actually extending your brand across borders. So now your pay.

Andrew McCormack 00:23:57 Now customer can go to Thailand or Malaysia and scan a QR code where you can send a payment without really having to know the details about how that system works. And, you know, it should be very easy. My mother or my my wife or my kids should be able to do this without knowing the details, right? That’s the point. So yeah, I think it’s really meant to be a network of networks. It’s meant to be a supporting brand. Sometimes I try to come up with analogies, but if you think about airlines, you know, there’s like the Star Alliance or whatever, and that it’s, you know, people care about their domestic carrier. And I guess Singaporeans love to travel with, you know, the Singapore Airlines and Canadians sort of love to travel with Air Canada, but, you know, they’re all part of the Star Alliance, and that actually provides a tremendous value to each of those individual companies in that alliance. And so we kind of think of ourselves as a sort of alliance like partner for them.

Jens Seidl 00:24:53 Yeah, that’s an interesting analogy. And it works because again, with the Star Alliance, you also have that technology aspect of interoperability, right? They share miles, status coins and all of this kind of good stuff.

Andrew McCormack 00:25:05 That’s right.

Jens Seidl 00:25:05 Okay. Maybe. And again, you you already mentioned the time at the BIS and how that has helped paving the road already for what you’re doing now. But have there been some takeaways from your other roles when you were with Elle at your payments and when you were with the payments Canada, where you say, these are some really interesting things you learned that you intend to apply to your new role as well?

Andrew McCormack 00:25:28 Yeah, in all cases, you know, I’m very fortunate to be, you know, in a position to build this company and launch this system. And I think I’m going to just take away the very hands on practical experiences that I did. Doing exactly that. Certainly in the UAE we built the company from scratch. So there’s a certain amount of heavy lifting and bootstrapping and going just to make something like that happen, you know.

Andrew McCormack 00:25:50 The launch of the instant payment scheme in the UAE was also tremendously helpful for me in terms of understanding how that pace of change can actually occur through an ecosystem. Right? You’ll always have your early adopters, your pilot banks. You need to work very closely with them to sort of get to that day zero, you know, launch point. But then, you know, in the UAE we onboarded 57 more banks. And that’s actually just a tremendous amount of hard work. You have to kind of really industrialize the processes around doing that, so that it’s as easy as possible for everyone involved to do it, because you just have to kind of rinse, wash, repeat, you know, and do it over and over and over and over and so, so thinking about those things, getting ahead of it’s not just the build, but it’s the participant testing and certification environment. It’s the process to get them through that lower order environment and up into the production system. And all of that needs to be as streamlined but comprehensive as possible so that the thing works when you go live.

Andrew McCormack 00:26:50 And those are just, you know, it’s that’s the hard part, actually, you know, to be honest. so I’m under no illusions that what we’re doing is going to be easy, but at least I’ve done it a few times before.

Jens Seidl 00:27:00 Yeah. Look, I can see all of that. And I’m sure this is one of the reasons why you have been chosen to to do this, because it needs that hand on practical approach. As he said before, it’s nice to test something in the lab. Now the rubber needs to hit the road and it sounds like you’re you’re ready to do that.

Andrew McCormack 00:27:21 As they say in the Middle East, inshallah.

Andrew McCormack 00:27:23 Oh my God. God willing.

Jens Seidl 00:27:27 Well, let me also.

Jens Seidl 00:27:28 Ask a slightly deliberately provocative question. well, maybe here it was. Swift just announced that they’re going to introduce a blockchain layer to their services and not just here, but over the last year or so now, there’s been so much talk about stablecoins and how stablecoins are going to change everything and do everything in the future.

Jens Seidl 00:27:52 At least some people seem to believe that. do we even have to bother with Nexus Global Payments then.

Andrew McCormack 00:27:58 You know, maybe I should just pack up and ride on into the sunset. You know, the one thing I’ve learned about, I mean, payments are just a massive. It’s, you know, where they want to call it a market. But if, you know, payments are ubiquitous, everyone everywhere needs and uses payments. The power of payments networks like Swift and Mastercard visa exist because they were able to hit that super scale early and, and just, you know, provide those tremendously valuable services to all the participants in those networks. And, they don’t go away overnight. So I’m on I lose zero sleep about, you know, waking up tomorrow and everything being stablecoins. because I just know that even if that was ultimately meant to be, it would take a very long time to achieve that outcome. So that’s my my going in thesis on. Now again, this is a massive market right.

Andrew McCormack 00:28:54 There are indeed potentially use cases that this particular new instrument is best suited to, to serve that maybe a, a legacy platform can’t or would be difficult to achieve. Certainly. I’m not entirely sure I even know what those use cases are. I mean, I know where stablecoins are used today, and I don’t think online gambling and, you know, crypto trading are, are necessarily important. But if, if, you know, if that’s the killer app for those stablecoins, then then you know, they can they can have that market, no problem. And we’ll we’ll stick to our knitting if, if there are more mainstream use cases and maybe cross-border payments are part of that conversation. then, you know, I think that’s a that’s a space to watch. And we will certainly keep our eyes out. We, we work with Swift in many ways. So we see what Nexus does do we think Nexus provides a unique value proposition vis a vis the way things work today? We think instant payments are here to stake and the logical extension of instant payments in the cross-border round we do believe makes sense long term.

Andrew McCormack 00:30:03 We also don’t see it as something that, you know, sits very distinct and separate from Swift. Swift is optimized for moving high value, you know, high ticket items, right? You need large payments. If I need to send significant amount of money home, it’s a swift transaction and it will be at, I suspect, for a long time. It’s optimized to to make that happen. And the correspondent model works very well. It’s not optimized today for the user experience. And I think that’s you know, that’s a simple fact, right? There’s banks out there that still don’t even have a button on the web page to send a cross-border swift wire transmitter. And I may have one of those banks, you know, in Canada without naming names. But all that to say, you know, certainly there is scope for Swift to sort of move down the stack or the feature space to to provide some Nexus like experiences. And that’s something that maybe they’ve also considered announcing with this scheme of announcement this week.

Andrew McCormack 00:31:05 So that’s interesting. And again, that would be new scope for them. And I know that, you know that will take some time and effort. But it’s certainly possible. And they have a giant network. And that’s something that I will watch closely. And we also really rely on Swift. Like in even in our model we have instant payments into countries. So there’s a first leg in the second leg and we have the concept of settlement account providers. And indeed, you know, even though the user experience is that it’s an instant payment. I can send you money, let’s say, in Germany, and I can just type in your phone number. And within 60s your account is credited. There is still a bit of magic under the hood, in the sense that two settlement account providers, one in Singapore and one in Germany, are there’s now an obligation that needs to be settled between those two parties and indeed on a wholesale basis, on a daily basis. That would happen on Swift. So so we do see ourselves as very complementary and indeed partnering in many ways with with Swift, we’re an extension of that network in some way, shape or form.

Andrew McCormack 00:32:05 So we always happy to work with and continue to collaborate with Swift on, on these types of discussions. And again, we don’t know what the future is going to look like, but we’ll forge ahead. And whether it’s stablecoins or the Swift scheme or any number of new fintech things that come along are our ultimate goal is to, you know, help achieve those public policy objectives. If our system scales and works and provides value, then it will be long term and sustainable. And if something better comes along and eats our lunch, then, you know. But then I guess that’s the the way, the way the the future evolves and it’s sort of out of my hands, but which is fine.

Jens Seidl 00:32:42 That’s fair enough. Yeah. And I think you make a fair point. It’s Swift hasn’t announced that it’s going to switch off everything they’ve done so far and move to a blockchain layer. So it is an extra layer. It’s not completely turning things upside down. So.

Andrew McCormack 00:32:57 Yeah. And to be able to announce a few things this week.

Andrew McCormack 00:33:00 And one was this blockchain piece. But the other one was this concept of a scheme. And it really did focus on retail. So to be honest, that’s the one that’s more interesting to me in terms of how it impacts my strategic roadmap or not the blockchain one. I don’t have strong opinions about that one, to be completely honest. Yeah, it seems that the stablecoin hype right now is largely predicated on the public blockchains and the ability for financial institutions to use that infrastructure as a kind of base layer to, to transact, which was which is the new part. Because previously that was not possible. I have one bee in my bonnet about that, though, which is to say, everything I’ve ever done worked on is usually highly regulated, overseen by central bank. And one of the things that we always have to measure ourselves against as infrastructure providers, what are the whether it’s the high value system or the clearing system in Canada or the instant payment system in the UAE, or now nexus the principles for financial market infrastructures, right, which set these guidelines and very rigorous guidelines across the whole spectrum of what a payment system should do.

Andrew McCormack 00:34:12 And that includes the legal basis. It includes, you know, credit and liquidity risk and a whole number of operational risks that must be, you know, mitigated or at least clarified in terms of how. And and it’s a tremendous amount of effort to make sure that your service complies with those FMS. Yeah. Isaiah, and I am a little surprised that nobody’s asking that question vis a vis these blockchains. Like, I don’t think you can get past chapter one of the FMS if you look at, you know, the Ethereum blockchain. You know, I don’t know if anyone really knows who owns it, what the legal basis is for that and how that would measure up, but that should be done. Someone should study that and say, okay, if everything else we do has to measure up against these high bar standards, have a look at that and tell me how that measures up. Maybe it does. I have no idea. But I suspect there’s some gaps.

Jens Seidl 00:35:04 And look, just just to be clear, I think that there is a use case for stablecoins.

Jens Seidl 00:35:08 And I think stablecoins will play a role going forward. But as you just laid out, I think it needs to be subject to the proper regulation. We need to make sure it’s safe and secure.

Andrew McCormack 00:35:19 So I think, you know, banks have always said, you know, we don’t mind having fintech competition as long as we all have a level playing field. Right. And the fintechs have always said, well, you know, thanks, but no thanks. We’d like a lighter touch. We’re not a bank. And, you know, we don’t introduce any systemic risk for, say, blah, blah, blah. And and so you see both sides of the argument. But at the end of the day, you know, some minimum standards. It certainly makes sense. You know, whether you’re talking about issuing stablecoins or tokenized deposits or whether you’re talking about an infrastructure layer like us, we are all one very bad cyber incident away from, you know, being shut down. And what happens when that happens.

Andrew McCormack 00:35:57 And and how do you, you know, how do you mitigate and manage those risks? How do you detect and respond to those scenarios. And we have to answer the mail on that, you know, every year to our regulators. So someone has to answer the mail on on those other infrastructures the same way.

Jens Seidl 00:36:12 That’s only fair. Absolutely. And we’re I’m conscious of time, but as we’re talking about new technologies, everybody has been talking about AI for the last couple of years and continues to do so. How do you look at AI and what you need to and will do with Nexus. Now, is it a useful tool for you? To what extent do you think it will also maybe change the user experience in the near future? What’s your outlook on AI?

Andrew McCormack 00:36:39 I see broadly.

Andrew McCormack 00:36:40 Sort of two directly applicable areas for me today, which is, you know, I’m building a company and, you know, I do have to be lean and mean. And, you know, I’m I don’t you know, it’s going to take some number of years before we get to a revenue steady state model that.

Andrew McCormack 00:36:57 So, you know, AI is a tremendous way to enhance the team that you have, the capabilities you have. You know, if you need to like these are simple things. But like I need to write a travel and expense policy for my new company. Like previously that might have taken me like a week or two to, you know, get some samples and sit down and bang it out. I can now basically have a draft 1 in 15 seconds. And this is tremendously valuable for me. You know, it’s not a contentious thing. It’s a travel and expense policy. You know, they’re all basically the same. They just you set your conditions and your policies and your flight limits and you’re done. Right? So, so, so that there’s a very practical use of AI when you’re building a company, which is just is tremendous. And I think we can accelerate and really manage our cost structure a little bit more intelligently as a result of that. But that’s not a very interesting answer. The more interesting kind of functional space is around the fraud capability.

Andrew McCormack 00:37:51 So most payment networks do have some fraud analytic capabilities. The liability and the responsibility for catching fraud is always with the participants. But the network sees more than any one given participant. Right. So so it’s incumbent on us to provide as intelligent, real time, basically alerts and triggers for the participants to consume and how you do that. These days, I think more and more is about having a sophisticated model. It used to be very rules based. So in the cards world, you know, if the same debit card is used more than six times at the same location within two hours, then trigger an alert. Like very hard coded rules, whereas the new models are significantly more adaptable and those are based on kind of trained, reinforced learning type models that, you know, should provide much better signals to the participants to say, you know, whoa, whoa, whoa, we got to stop this payment or not even allow it to happen. Yes.

Jens Seidl 00:38:51 Yeah. And that was what I thought even before that, you were mentioning having to create the rulebook and then test all your participants against the rulebook.

Jens Seidl 00:39:00 I guess there’s also a role for automated testing and maybe.

Andrew McCormack 00:39:04 Yeah, I mean, at the end of the day, though, testing with, with.

Andrew McCormack 00:39:06 A, with respect to a participant is really ensuring that their software build and their implementation meets your specs. And certainly the AI tools could maybe help you analyze that and expedite that a bit. But thus far, in my experience, it’s that that one is very much just a very methodical step by step, pass fail. You know, you either can or you can’t achieve this test case. And if you can’t, then, you know, go fix it and come back. So yeah, it might be some there’s a there is some energy on AI ops, which is interesting to say. Okay. In the payments network there’s always some participant who’s having some trouble, a bank goes down and network link goes down. And the more intelligence you have monitoring those things, the quicker you can respond and mitigate those things. And so there’s certainly a lot of interesting stuff happening in that in that sphere as well.

Andrew McCormack 00:39:54 And that’s but that’s way beyond payments. That’s any any large network operation center should have some of that capabilities now. Absolutely. Yeah.

Jens Seidl 00:40:03 Great. And I think we’re running out of time. Hopefully the queues will be much shorter now when we go all the way to to the exhibition to get in. Thank you so much for joining us today. I hope we will continue this dialogue. I’m grateful that we’re going to join us in Istanbul next year in March for the central Bank Payment Conference, so we’re definitely going to get an update then And after? Well, the first six months.

Andrew McCormack 00:40:27 Yeah.

Jens Seidl 00:40:27 Since we’ve recorded this.

Andrew McCormack 00:40:29 Yeah, that should be wonderful. Turkey is obviously one of my favorite places to go, so thank you for organizing the conference in Turkey, which is great. And then separately, yeah, six months would be a good kind of milestone checkpoint to to kind of give the the audience, I think hopefully some meaningful progress against everything I’ve just described.

Jens Seidl 00:40:46 Sounds good. Yeah. And do thank you so much.

Jens Seidl 00:40:48 Thanks for joining.

Andrew McCormack 00:40:49 Us. Thank you.

Jens Seidl 00:40:50 All right. And that is another episode of The Exchange. Thank you all for listening in today. Please do like follow do whatever you need to make sure that you get the next episode as well on your podcast platform. And thank you all. Have a good one.